How Foreign Resident CGT Rules Work
How it works
Foreign residents are only subject to Australian CGT on Taxable Australian Property (TAP). TAP includes direct interests in Australian real property (land, houses, apartments), mining and forestry rights, and shares in companies where more than 50% of market value is attributable to Australian real property. Gains on assets that are not TAP — such as shares in a diversified ASX-listed company or overseas investments — are disregarded entirely.
The two major restrictions for foreign residents are the CGT discount limitation and the main residence exemption denial. For assets acquired after 8 May 2012, the 50% CGT discount is pro-rated based on the number of days you were an Australian resident divided by the total holding period. For assets acquired before that date, the full discount is available regardless of residency changes. The main residence exemption has been unavailable to foreign residents for CGT events occurring on or after 1 July 2020.
This calculator also computes Foreign Resident Capital Gains Withholding (FRCGW). From 1 January 2025, buyers must withhold 15% of the purchase price on all Australian real property transactions with foreign resident vendors — there is no minimum price threshold. The withheld amount is remitted to the ATO and credited against your tax liability when you lodge your return. If the withholding exceeds your actual CGT, the excess is refunded.
When to use this calculator
- You are a foreign resident selling Australian real property or other Taxable Australian Property
- You were previously an Australian resident and want to understand how residency changes affect your CGT discount
- You need to estimate the FRCGW withholding amount a buyer will deduct from your sale proceeds
- You want to compare your CGT under foreign resident tax rates (which have no tax-free threshold) versus resident rates
- You are buying property from a foreign resident vendor and need to calculate the withholding obligation
Key concepts
- Taxable Australian Property (TAP)
- The limited category of CGT assets on which foreign residents pay Australian CGT. It covers Australian real property, certain mining/forestry rights, business assets of an Australian permanent establishment, and shares in companies where Australian real property makes up more than 50% of market value.
- Pro-rata CGT discount
- For assets acquired after 8 May 2012, the 50% individual CGT discount is reduced proportionally. The formula is: discount = 50% x (Australian resident days / total holding days). If you held an asset for 2,000 days but were only an Australian resident for 1,200 of those days, your discount is 50% x 60% = 30%.
- FRCGW (Foreign Resident Capital Gains Withholding)
- A withholding obligation on buyers of Australian real property from foreign residents. From 1 January 2025, the rate is 15% of the purchase price with no threshold. Previously (1 July 2017 to 31 December 2024) the rate was 12.5% and only applied to properties sold for $750,000 or more.
- Clearance certificate
- Australian residents can apply for a clearance certificate from the ATO to confirm they are not a foreign resident, which removes the buyer's withholding obligation. Foreign residents can apply for a variation notice to reduce the withholding amount if their expected CGT is less than 15% of the sale price.
Worked example — foreign resident selling Australian property
Mei became an Australian tax resident in January 2018 and purchased an investment apartment in Melbourne for $620,000. In March 2022 she moved to Singapore and became a foreign resident for tax purposes. She sold the apartment in February 2026 for $780,000.
Holding period: January 2018 to February 2026 — approximately 2,953 days Australian resident days: January 2018 to March 2022 — approximately 1,521 days
| Step | Detail | Amount |
|---|---|---|
| Capital gain | $780,000 − $620,000 | $160,000 |
| Pro-rata fraction | 1,521 ÷ 2,953 | 51.5% |
| Adjusted discount | 50% × 51.5% | 25.8% |
| Discount amount | $160,000 × 25.8% | $41,280 |
| Assessable gain | $160,000 − $41,280 | $118,720 |
| FRCGW withheld by buyer | $780,000 × 15% | $117,000 |
Mei includes $118,720 in her Australian tax return. Foreign resident tax rates apply — there is no tax-free threshold, so the first $135,000 is taxed at 30%. Her total CGT is approximately $35,616. Since the buyer withheld $117,000, Mei receives a refund of the difference when she lodges. Had Mei still been an Australian resident, the full 50% discount would have applied, reducing the assessable gain to $80,000.